Chinese crusher positions itself on the new Silk Road

The Chinese government would like the historic Silk Road to be prominent once again, and U.S. soybeans could play an important role.

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Shaanxi Shiyang Group established its soybean crushing business in Xi'an, a city far from the Chinese coasts and other competitors. Preferring to rely on a strong transportation network that includes roads, river and rail the company believes it will be best for their business to be near their customers.

Sound familiar? It did to Governor Kim Reynolds and other members of an Iowa Soybean Association (ISA) trade mission last week as they visited the company.

"We have a lot in common," Reynolds told the CEO while pointing to the state of Iowa on a map on the back of an ISA business card. "We are in the center of the country far from the coasts too."

Chang Qingshan, CEO of the Shaanxi Shiyang Group, hopes the strategic position will capitalize on the reemergence of the Silk Road.

The Silk Road was an ancient trade route between China and the West during the Roman Empire. It’s how silk from the orients make it to Europe and how China received western goods in return.

China President Xi Jinping announced in 2013 a new $900 billion trade corridor would reopen channels between China and Central Asia, the Middle East and Europe. The new Silk Road will be on land and sea with experts saying it will be a way for China to continue to boost global trade.

"They don’t have as much competition in the central part of China. If you look at the re-establishment of the silk road going north and west out of China there’s a lot of advantages logistically," Kirk Leeds, ISA CEO, said after touring Shaanxi Shiyang Group's facility.

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Shiyang Group was first established in 1992 and transformed into a joint stock limited company in 1999. The Group focuses mainly on farming, breeding and processing but it also has integrated into other areas like the sale of soybean cooking oil. The CEO told the ISA delegation and Governor Reynolds that 35 percent of the beans they crush is from the United States.

"They told us that 35 percent of their soybeans come from the U.S., but that leaves 65 percent that didn’t," Leeds said. "You have to listen to customers, but at the end of the day when you look at the total value of soybeans, consistency, on-time delivery and financing, they know there is an advantage in buying from the U.S."

Qingshan told the Iowa delegation he continues to be concerned with foreign material in shipments coming from the U.S., but as the Iowa group drilled into the numbers, they found the percentage was below the allowable rate for the beans they had purchased.

Currently, one out of every four rows of soybeans are exported to China. The country is by far the largest soybean importer projected at 83 million metric tons, or a little more than 3 billion bushels.

Jeff Jorgenson, an ISA director from Sidney, and other U.S. farmers would like that number to increase as large surpluses drag commodity prices down.

“There’s no better opportunity to sell soybeans than right now," Jorgenson said. "There is affordability, and we have plenty of supply, so obviously we see that in the markets. There is no better opportunity than having the folks we have in China with  Ambassador Branstad, with the United States Soybean Export Council and our Governor that we shouldn’t be able to make strides in moving more soybeans to China.”

Originally published for the Iowa Soybean Association. Read more articles at www.iasoybeans.com.

 

U.S. Ambassador Branstad still championing for Iowa agriculture

United States Ambassador Terry Branstad received a standing ovation from Iowa's agricultural groups as he entered a meeting room at the U.S. Embassy in Beijing Tuesday.

It was the first event in a historic week of meetings during the all-Iowa agriculture trade mission: one that marks the first time all of the state’s commodity groups have traveled overseas together. The purpose of the trip is to enhance relationships and create new ones between the people of China and Iowa farmers, agricultural groups and elected leaders.

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"Welcome to the American Embassy. We are excited to have you here," Branstad told the farmers and agriculture representatives at the start of the meeting.

He said that it had been a busy three weeks in his new position with deep dives into a wide range of information relating to China. Branstad was flanked by the heads of the major departments at the Embassy including Defense, public affairs, agriculture affairs, commercial affairs and political affairs.

While his position as Ambassador offers new opportunities, Branstad won't forget the tactics that made him successful and led to being the nation’s longest-serving governor. He plans to continue the Iowa tradition of visiting every county in the state annually by visiting all of China's regions while conducting meetings with high-ranking government officials.

Governor Reynolds, the head of the all-Iowa agriculture trade mission, thanked the Ambassador for the historic meeting.

"Relationships are especially important in China, and we are fortunate that Governor Branstad welcomed a then-local agricultural official from China over 30 years ago into Iowa named Xi Jinping who is now the nation's president," Reynolds said earlier in the week during tours in Shanghai and Xi'an.

Those relationships have now been enriched and extended with Branstad's new role as U.S. Ambassador.

"It doesn't escape Ambassador Branstad of how important it is that all of the Iowa agriculture groups are here in China," Rolland Schnell, president of the Iowa Soybean Association, said. "We are here as one unit and Branstad recognizes how important that is to Iowa’s economy."

The delegation hopes to further solidify with the leaders of China that we are partners in meeting mutual goals in food security, safety and sustainability.

Department heads at the Embassy gave the agriculture leaders and farmers a snapshot of issues they are working on in China. Several issues discussed were:

  1. China's investment in the United States has now surpassed U.S. investment in China.
  2. Food consumption in China is expected to grow 25 percent from 2015 to 2020.
  3. China doesn't want to be reliant on any one country for goods, but U.S. soybeans are an exception.
  4. The U.S. has over $450 billion in investments in China.
  5. China is pursuing an initiative to increase manufacturing of its own agricultural machinery.
  6. A top priority in China is to be more environmentally friendly.

One question from the Iowa delegation pertained to trade and what some would consider political instability in Washington, D.C. Ambassador Branstad assured the group that trade between the U.S. and China would continue to grow.

"We were assured that agricultural trade is always separate from those other issues," Schnell said. "They need us, they want us, and we don’t need to worry about issues that may come up politically affecting our trade.”

That was good news for all members of the Iowa delegation; especially for those members growing and representing soybeans. China is by far the largest soybean importer in the world and is projected at 83 million metric tons, or a little more than 3 billion bushels. The U.S. markets nearly 1.1 billion bushels annually.

Branstad told the group that during meetings with President Trump last week in Washington, D.C. he presented a plan to bring top business leaders to China to discuss trade barriers and possibly sign contracts.

Soybeans, of which Iowa often leads the nation in production of, are a primary feed ingredient for pigs. China, which wasn’t in the market for soybeans 15 years ago, currently accounts for 60 percent of global soybean imports – and growing. One of every four rows of soybeans grown in Iowa is destined for China.

It is apparent that Branstad still intends to champion Iowa agriculture in his new position, telling the leaders gathered that he hopes to get more U.S. products into the embassy and China.

"I met with Tom Vilsack (currently president and CEO of the US Dairy Export Council) to talk about the vague rules concerning dairy imports into China. The milk we drink in the Embassy is from Australia," He said. "I'd like to see it come from the U.S."

Schnell was honored to have the opportunity to visit with Ambassador Branstad in his new role in China.

“It is overwhelming when you step back and think about it,” Schnell said about meeting with a U.S. Ambassador in China. “Most farmers don’t get an opportunity to do this; to be there and see all the things that are going on at the ground level, all the work that is being done to support agriculture. I don’t think the general farming public realizes what is involved and what it takes to make the excellent trade programs we have and how they translate into dollars in farmers’ pockets."

Originally published for the Iowa Soybean Association. Read more articles at www.iasoybeans.com.